Sound Financial Group Blog

The banks are in trouble again, but this time for poor investment advice. Which? Has found that only 13% of the banks that they investigated gave suitable investment advice...  

The banks and bankers are any easy target. However very few bank employees are the ‘fat cats’ that some would have us believe, and when it comes to financial advice I know from experience that a high street bank, private or otherwise, is probably the worst place for anyone to receive any form of so called financial advice.

The undercover investigation by Which? sent researchers into 37 banks and concluded that just 5 of them gave what they deem to be good advice about investments. The researchers posed as customers who were all over the age of 60 and inexperienced investors. Despite the ‘customer’ profiles most of the bank’s advisers recommended complex and expensive investment products and were guilty of failing to mention that many had substantial exit penalties in the first five years and failed to disclose the costs for advice claiming that it was ‘free’ when in reality commissions were being paid by product providers of up to 8.8% of the investment amount! As Jim Royle would say…”Free? My a**e!”

These findings may come as a shock and surprise to many, however in my experience these instances are all too common. The fundamental problem here is that once again financial advice is being confused with the sale of a financial product. I accept that in many cases some form of financial product may be advisable, but where certain products that are in the main unsuitable are being sold purely to receive a commission, the recipe for disaster becomes complete.

Whether this sort of malpractice will be totally eradicated from 2013 when the FSA’s Retail Distribution Review (RDR) comes into force remains to be seen, but in the mean time consumers need to be aware that the best way to obtain proper impartial financial advice is to seek out an adviser who charges a fee, is truly independent and preferably qualified to a higher level than the entry-level qualifications that currently exist.       

If you wish to discuss your own financial planning strategy or would just like a second opinion on your current arrangements, please contact us and take advantage of a no cost or obligation meeting.